1. (a) Powers of commission.

   1. (1) The Arkansas Racing Commission may determine, upon the recommendation of the Arkansas Racing Commission, at the time of initial application by a publicly traded corporation for registration as a holding company, or at any time thereafter, that the public interest and the purposes of The Arkansas Casino Gaming Amendment of 2018, Arkansas Constitution, Amendment 100, require that any individual who has a material relationship to, or material involvement with, a publicly traded corporation, affiliated company, or a licensee that is subject to the jurisdiction of Amendment 100 should apply for a finding of suitability or licensing.
   2. (2) A person may be deemed to have a material relationship to, or material involvement with, a corporation, affiliated company, or a licensee if the person is a controlling person or key employee of the corporation, affiliated company, or a licensee, or if the person, as an agent, consultant, advisor, or otherwise, exercises a significant influence upon the management or affairs of the corporation, affiliated company, or a licensee.
   3. (3) The foregoing powers of the Arkansas Racing Commission are not limited to individuals having a formal and direct involvement or relationship with a publicly traded corporation, affiliated company, or a licensee, nor to individuals who are beneficial owners of any stated percentage of the outstanding equity securities of a publicly traded corporation, affiliated company, or a licensee.

2. (b) Beneficial owners of voting securities.

   1. (1) The Arkansas Racing Commission shall consider the following in making its determination as to which beneficial owners of voting securities of publicly traded corporations must or may be required to be found suitable or to be licensed:

      1. (A) Each person who acquires, directly or indirectly:

3. (i) Beneficial ownership of any voting security; or

   1. (ii) Beneficial or record ownership of any nonvoting security, in a publicly traded corporation which is registered with the Arkansas Racing Commission may be required to be found suitable if the Arkansas Racing Commission has reason to believe that the person’s acquisition of that ownership would otherwise be inconsistent with the declared policy of this state;

      1. (B) Each person who acquires, directly or indirectly, beneficial or record ownership of any debt security in a publicly traded corporation which is registered with the Arkansas Racing Commission may be required to be found suitable if the Arkansas Racing Commission has reason to believe that the person’s acquisition of the debt security would otherwise be inconsistent with the declared policy of this state;
      2. (C) Each person who, individually or in association with others, acquires, directly or indirectly, beneficial ownership of more than five (5) percent of any class of voting securities of a publicly traded corporation registered with the Arkansas Racing Commission, and who is required to report, or voluntarily reports, the acquisition to the Securities and Exchange Commission pursuant to section 13(d)(1), 13(g) or 16(a) of the Securities Exchange Act of 1934, as amended, 15 U.S.C. §§ 78m(d)(1), 78m(g) and 78p(a), respectively, shall, within ten (10) days after filing the report and any amendment thereto with the Securities and Exchange Commission, notify the Arkansas Racing Commission that the report has been filed with the Securities and Exchange Commission;
      3. (D) Each person who, individually or in association with others, acquires, directly or indirectly, the beneficial ownership of more than ten percent (10%) of any class of voting securities of a publicly traded corporation registered with the Arkansas Racing Commission, or who is required to report, or voluntarily reports, such acquisition pursuant to section 13(d)(1), 13(g) or 16(a) of the Securities Exchange Act of 1934, as amended, 15 U.S.C. §§ 78m(d)(1), 78m(g) and 78p(a), respectively, shall apply to the Arkansas Racing Commission for a finding of suitability within thirty (30) days after the Arkansas Racing Commission mails the written notice; and

      4. (E) A person who acquires, directly or indirectly:

         1. (i) Beneficial ownership of any voting security; or
         2. (ii) Beneficial or record ownership of any nonvoting security or debt security, in a publicly traded corporation created under the laws of a foreign country which is registered with the Arkansas Racing Commission shall file such reports and is subject to such a finding of suitability as the Arkansas Racing Commission may prescribe.
   2. (2) All rules and regulations of the Securities and Exchange Commission applicable in determining whether a person is the beneficial owner of a particular equity security for purposes of Section 13(d) of the Federal Securities Exchange Act may be considered by, but shall not be binding upon, the Arkansas Racing Commission in making its determination whether, and the extent to which, a person is the beneficial owner of a voting security for the purposes of 23 CAR § 358-1701(8), § 358-1709(c), § 358-1710(b), and § 358-1710(f).
   3. (3) This subpart applies to every person who is, directly or indirectly, the beneficial owner of any voting security in a publicly traded corporation which is registered with the Arkansas Racing Commission, irrespective of the time of acquisition of such ownership.

   4. (4) If any securities of a publicly traded corporation are held in street name, by a nominee, an agent or trust, the publicly traded corporation shall render maximum assistance to the Arkansas Racing Commission, upon its request, to determine the beneficial ownership of such securities.

      1. (c) Officers and employees.
   5. (1) The Arkansas Racing Commission shall require application for finding of suitability and may require licensing of any officer or employee of a publicly traded corporation whom the Arkansas Racing Commission finds to be actively and directly engaged in the administration or supervision of, or any other significant involvement with, the activities of a corporate casino licensee.
   6. (2) The Arkansas Racing Commission may require application for licensing or finding of suitability by any officer or employee of a publicly traded corporation whose application is not otherwise required pursuant to subdivision (c)(1) of this section, if the Arkansas Racing Commission determines that the policies of the state regarding gaming would be served by such action.

   7. (3) The following officers or employees of the publicly traded corporation are deemed to be actively and directly engaged in the administration or supervision of, and significantly involved with, the activities of the corporate licensee and therefore are normally required to be licensed or found suitable:

      1. (A) Each employee who is involved in gaming and who is also a director of the publicly traded corporation; and

      2. (B) The president, any persons performing the function of principal executive officer or principal operating officer, the principal financial officer, and any persons performing the function of chief technology officer or chief information officer.

         1. (d) Directors.
   8. (1) The Arkansas Racing Commission shall require application for finding of suitability and may require licensing of any director whom the Arkansas Racing Commission finds to be actively and directly engaged in the administration or supervision of the gaming activities at a licensed gaming establishment of a subsidiary corporate licensee.
   9. (2) The Arkansas Racing Commission may require application for licensing or finding of suitability by any director of a publicly traded corporation whose application is not otherwise required by subdivision (d)(1) of this section, if the Arkansas Racing Commission determines that the policies of the state regarding gaming would be served by such action.

   10. (3) The following directors of the publicly traded corporation are deemed to be actively and directly engaged in the administration or supervision of the gaming activities of the subsidiary corporate licensee and therefore are normally required to be licensed or found suitable:

       1. (A) Each director who serves as director of the board of directors;
       2. (B) Each director who serves as the director of the audit committee;
       3. (C) Each director who, individually or in association with others, is the beneficial owner of greater than five percent (5%) of any class of voting securities of the registered publicly traded corporation for which he or she serves as a director; and
       4. (D) Each person, whether as director or otherwise, who serves on any committee to which is delegated the authority of the Arkansas Racing Commission to act in any matter involving the activities of a corporate casino licensee and each director who serves in the capacity of lead director.

4. (e) Appointments and elections.

   1. (1) Except in a transaction subject to this part which involved a change of control of a publicly traded corporation as a whole, an individual may be appointed or elected to a position described in 23 CAR § 358-1710(c) or § 358-1710(d) without the prior approval of the Arkansas Racing Commission, and may occupy the position and exercise the authority and duties thereof until otherwise ordered by the Arkansas Racing Commission.
   2. (2) The Arkansas Racing Commission may impose stricter requirements, including a requirement of prior approval, on any publicly traded corporation or with respect to any individual at any time.

5. (f) Institutional investor.

   1. (1)

      1. (A) An institutional investor that becomes or intends to become subject to this part as a result of its beneficial ownership of voting securities of a publicly traded corporation registered with the Arkansas Racing Commission may apply to the Arkansas Racing Commission for a waiver of the requirements with respect to the beneficial ownership of the voting securities of such publicly traded corporation if such institutional investor holds the securities for investment purposes only, provided, however, that an institutional investor shall not be eligible to receive or hold a waiver if the institutional investor beneficially owns, directly or indirectly, except as otherwise provided in subdivision (f)(2) of this section, more than twenty-five percent (25%) of the voting securities and if any of the voting securities were acquired other than through a debt restructuring.
      2. (B) Voting securities acquired before a debt restructuring and retained after a debt restructuring or as a result of an exchange, exercise, or conversion, after a debt restructuring, of any securities issued to the institutional investor through a debt restructuring, shall be deemed to have been acquired through a debt restructuring.
      3. (C) A waiver granted under this section shall be effective only as long as the institutional investor’s direct or indirect beneficial ownership interest in such voting securities meets the limitations set forth above.
   2. (2) An institutional investor that has been granted a waiver pursuant to subdivision (f)(1) of this section, may beneficially own more than twenty-five percent (25%), but not more than twenty-nine percent (29%), of the voting securities of a publicly traded corporation registered with the Arkansas Racing Commission, only if such additional ownership results from a stock repurchase program conducted by such publicly traded corporation, and upon the condition that such institutional investor does not purchase or otherwise acquire any additional voting securities of the publicly traded corporation that would result in an increase in the institutional investor’s ownership percentage.

   3. (3)

      1. (A) An institutional investor shall not be deemed to hold voting securities for investment purposes only unless the voting securities were acquired and are held in the ordinary course of business as an institutional investor and not for the purpose of causing, directly or indirectly, the election of a majority of the members of the board of directors, any change in the corporate charter, bylaws, management, policies or operations of the publicly traded corporation registered with the Arkansas Racing Commission or any of its gaming affiliates, or any other action which the Arkansas Racing Commission finds to be inconsistent with investment purposes only.

      2. (B) The following activities shall not be deemed to be inconsistent with holding voting securities for investment purposes only:

         1. (i) Voting, directly or indirectly through the delivery of a proxy furnished by the board of directors, on all matters voted on by the holders of such voting securities;
         2. (ii) Serving as a member of any committee of creditors or security holders formed in connection with a debt restructuring;
         3. (iii) Nominating any candidate for election or appointment to the board of directors in connection with a debt restructuring;
         4. (iv) Accepting appointment or election as a member of the board of directors in connection with a debt restructuring and serving in that capacity until the conclusion of the member’s term;
         5. (v) Making financial and other inquiries of management of the type normally made by securities analysts for informational purposes and not to cause a change in its management, policies, or operations; and
         6. (vi) Such other activities as the Arkansas Racing Commission may determine to be consistent with such investment intent.

   4. (4) An application for a waiver must include:

      1. (A) A description of the institutional investor’s business and a statement as to why the institutional investor is within the definition of institutional investor set forth in this part;

      2. (B)

         1. (i) A certification made under oath and the penalty of perjury, that the voting securities were acquired and are held for investment purposes only as defined in subdivision (f)(2) of this section and a statement by the signatory explaining the basis of the signatory’s authority to sign the certification and to bind the institutional investor to its terms.
         2. (ii) The certification shall also provide that the applicant agrees to be bound by and comply with The Arkansas Casino Gaming Amendment of 2018, Arkansas Constitution, Amendment 100, and the rules adopted thereunder, to be subject to the jurisdiction of the courts of Arkansas, and to consent to Arkansas as the choice of forum in the event any dispute, question, or controversy arises regarding the application or any waiver granted under this section;
      3. (C) A description of all actions, if any, taken or expected to be taken by the institutional investor relating to the activities described in subdivision (f)(2) of this section;
      4. (D) The name, address, telephone number, and Social Security number of the officers and directors, or their equivalent, of the institutional investor as well as those persons that have direct control over the institutional investor’s holdings of voting securities of the publicly traded corporation registered with the Arkansas Racing Commission;
      5. (E) The name, address, telephone number, and Social Security or federal tax identification number of each person who has the power to direct or control the institutional investor’s exercise of its voting rights as a holder of voting securities of the publicly traded corporation registered with the Arkansas Racing Commission;
      6. (F) The name of each person that beneficially owns more than five percent (5%) of the institutional investor’s voting securities or other equivalent;
      7. (G) A list of the institutional investor’s affiliates;

      8. (H) A list of all securities of the publicly traded corporation registered with the Arkansas Racing Commission that are or were beneficially owned by the institutional investor or its affiliates within the preceding year, setting forth a description of:

         1. (i) The securities;
         2. (ii) Their amount; and
         3. (iii) The date of acquisition or sale;
      9. (I) A list of all regulatory agencies with which the institutional investor or any affiliate that beneficially owns voting securities of the publicly traded corporation registered with the Arkansas Racing Commission files periodic reports, and the name, address, and telephone number of the person, if known, to contact at each agency regarding the institutional investor;

      10. (J)

          1. (i) A disclosure of all criminal or regulatory sanctions imposed during the preceding ten (10) years and of any administrative or court proceedings filed by any regulatory agency during the preceding five (5) years against the institutional investor, its affiliates, any current officer or director, or any former officer or director whose tenure ended within the preceding twelve (12) months.
          2. (ii) As to a former officer or director, such information need be provided only to the extent that it relates to actions arising out of or during such person’s tenure with the institutional investor or its affiliates;
      11. (K) A copy of the institutional investor’s most recent Schedule 13D or 13G and any amendments thereto filed with the Securities and Exchange Commission concerning any voting securities of the publicly traded corporation registered with the Arkansas Racing Commission;
      12. (L) A copy of any filing made under 15 U.S.C. § 18a with respect to the acquisition or proposed acquisition of voting securities of the publicly traded corporation registered with the Arkansas Racing Commission; and
      13. (M) Any additional information the Arkansas Racing Commission may request.

   5. (5) The Arkansas Racing Commission shall consider all relevant information in determining whether to grant a waiver requested pursuant to subdivision (f)(1) of this section, including but not limited to:

      1. (A) Whether the waiver is consistent with the policy set forth in this part;
      2. (B) The factors set forth within this part; and
      3. (C) Any views expressed to the Arkansas Racing Commission by the publicly traded corporation or any licensed affiliate thereof.

   6. (6)

      1. (A) An institutional investor that has been granted a waiver of a finding of suitability and that subsequently intends not to hold its voting securities of the publicly traded corporation for investment purposes only, or that intends to take any action inconsistent with its prior intent shall, within two (2) business days after its decision, deliver notice to the Arkansas Racing Commission in writing of the change in its investment intent.
      2. (B) The Arkansas Racing Commission may then take such action under this part as the Arkansas Racing Commission deems appropriate.

   7. (7)

      1. (A) A waiver of the requirements that has been granted pursuant to this section shall not be construed as a waiver of or exemption from the prior approval requirements of this part.

      2. (B) An institutional investor that intends to apply for a waiver of the requirements pursuant to this section must also simultaneously apply to the Arkansas Racing Commission for an exemption from the prior approval requirements of this part if:

         1. (i) The proposed acquisition would give the institutional investor, directly or indirectly, the power to direct or cause the direction of the management and policies of the publicly traded corporation; or
         2. (ii) The institutional investor intends to increase its beneficial ownership to more than twenty percent (20%) but not more than twenty-five percent (25%) of the voting securities of the registered publicly traded corporation.
      3. (C) If at the time an institutional investor applies to the Arkansas Racing Commission for a waiver of the requirements it does not intend to increase its beneficial ownership to more than twenty percent (20%) of the voting securities of the registered publicly traded corporation but subsequently intends to increase to more than twenty percent (20%) but not more than twenty-five percent (25%), it must apply to the Arkansas Racing Commission for an exemption from the prior approval requirements of this part.

   8. (8)

      1. (A) If the Arkansas Racing Commission finds that an institutional investor has failed to comply with the provisions of this section, or should be subject to a finding of suitability to protect the public interest, the Arkansas Racing Commission may, in accordance with this part, require the institutional investor to apply for a finding of suitability.
      2. (B) The institutional investor affected by the action taken by the Arkansas Racing Commission may request a hearing on the merits of such action.
      3. (C) The hearing shall be included on the agenda of the next regularly scheduled Arkansas Racing Commission meeting occurring more than ten (10) working days after the request for hearing.
      4. (D) Upon good cause shown by the institutional investor, the Arkansas Racing Commission may waive the ten-day requirement and place such hearing on an earlier Arkansas Racing Commission agenda.
      5. (E) The Arkansas Racing Commission, for any cause deemed reasonable, may by a majority vote, sustain, modify or reverse the decision of the Arkansas Racing Commission, or remand the matter to the Arkansas Racing Commission for such further investigation and reconsideration as the Arkansas Racing Commission may order.
      6. (F) While the application for a finding of suitability review of the Arkansas Racing Commission’s action requiring the filing of such application is pending, the institutional investor shall not, directly or indirectly, cause or attempt to cause any management, policy, or operating changes in the publicly traded corporation or any gaming affiliate.
   9. (9) Any publicly traded corporation registered with the Arkansas Racing Commission or any registered or licensed subsidiary thereof shall immediately notify the Arkansas Racing Commission of any information about, fact concerning or actions of, an institutional investor holding any of its voting securities, that may materially affect the institutional investor’s eligibility to hold a waiver under this section.

   10. (10)

       1. (A) An institutional investor that is subject to this subpart as a result of its beneficial ownership of voting securities of a publicly traded corporation registered with the Arkansas Racing Commission and that has not been granted a waiver pursuant to subdivision (f)(1) of this section, may beneficially own more than ten percent (10%), but not more than eleven percent (11%), of the voting securities of such publicly traded corporation, only if such additional ownership results from a stock repurchase program conducted by the publicly traded corporation, upon the same conditions as provided in subdivision (f)(2) of this section.
       2. (B) Unless otherwise notified by the Arkansas Racing Commission, such an institutional investor is not required to apply to the Arkansas Racing Commission for a finding of suitability, but shall be subject to reporting requirements as prescribed by the Arkansas Racing Commission.

6. (g) Proscribed activities with respect to “unsuitable” persons.

   1. (1) If a person required by the Arkansas Racing Commission to apply for a finding of suitability fails, refuses or neglects to apply for a finding of suitability or a license within thirty (30) days after the Arkansas Racing Commission orders that such application be made, the Arkansas Racing Commission may find such person to be unsuitable.

   2. (2) The Arkansas Racing Commission may determine a publicly traded corporation registered with the Arkansas Racing Commission to be unsuitable, or take other disciplinary action, if the publicly traded corporation, after the Arkansas Racing Commission serves notice to the publicly traded corporation that a person is unsuitable to be a stockholder or to have any other relationship or involvement with such publicly traded corporation or with a corporate licensee or any other affiliated company:

      1. (A) Pays to any person found to be unsuitable any dividend or interest upon any voting securities or any payment or distribution of any kind whatsoever except as permitted by subdivision (g)(2)(D) of this section;
      2. (B) Recognizes the exercise by any such unsuitable person, directly or indirectly, or through any proxy, trustee or nominee, of any voting right conferred by any securities or interest in any securities;
      3. (C) Pays to any such unsuitable person any remuneration in any form for services rendered or otherwise except as permitted pursuant to this part; or
      4. (D) Fails to pursue all lawful efforts to require such unsuitable person to relinquish his or her voting securities including, if necessary, the immediate purchase of said voting securities by the publicly traded corporation for cash at fair market value.

7. (h) Exemptions.

   1. (1) The Arkansas Racing Commission may, either generally or specifically, exempt a person, a security, a transaction, or any portion thereof, from the application of this subpart or any portion thereof if the Arkansas Racing Commission determines that such exemption is consistent with the purpose of the act.
   2. (2) The Arkansas Racing Commission may by its order, from time to time, delegate to the commission the power to grant exemptions from the application of this subpart, to the extent, and within the scope, specified in such order.

Codification Notes: The Securities and Exchange Act of 1934 is codified at 15 U.S.C. § 78a et seq.